18 September 2011
my co has purchased certain fixed assets from china. Cost was $ 500000. We paid 30% in adv. and balance 70% was paid through LC after 3 months. pls explain how to account for these entry. at what cost asstes shoudl be capitalised as rate of $ was changed at each transaction day.
29 September 2011
well the asset should be accounted as fixed asset as on that date only when all the risks and reqards relating to that asset have been transferred to u
29 September 2011
When the advance amount was paid i.e 30 % i.e.$ 150000, the above entry is required to be passed at the currency rate as on the date of the payment of the amount.
29 September 2011
If on the date of receipt the exchange rate hacve been changed to Rs 48 then the asset must be recored at the amount of advance paid plus the balance amount @ rate of exchange as on the date of receipt of asset
29 September 2011
Assume on the date of the receipt of the asset, the exchange rate have increased to Rs 48, then in such case the asset will be recorded at $ 150000*45 + $ 350000*48 i.e. Rs 2,35,50000
29 September 2011
If on the payment date the amount was paid at a different rate then in such case what is the difference between the exchange rate of recording of purchase of asset and date of payment to be charged as Exchange loss/profit.
29 September 2011
The LC charges are also reqd to be capitalised , the same have not been included in the aforesaid so as to make clarity in accounting entries related to exchange rates
CAclubindia
